0 pesos in 1905, and 103,507,556
pesos in 1906, appears to indicate an encouraging state of prosperity
in the country, although an average of 341/2 pesos a year (nearly L2 :
12s.), in addition to the increased prices paid for home manufactures,
seems to be a very heavy indirect tax upon so poor a people.

_Currency._--The monetary circulation in Chile consists almost wholly
of paper currency, nominally based on a gold standard of 18d. per
peso. The conversion law of 1895 made the currency convertible at this
rate, although the gold peso was rated at 48d. previous to that date;
but the financial crisis of 1898 caused the suspension of specie
payments, and a forced issue of additional paper led to a further
postponement of conversion and the prompt withdrawal of specie from
circulation. The paper circulation consists of national and bank
issues. The former owes its existence very largely to the war with
Peru, the civil war of 1891, and the financial troubles of 1898. On
the 1st of January 1890 the national issues stood at 22,487,916 pesos,
and the bank issues at 16,679,790 pesos, making a total of 39,167,706
pesos currency in circulation. This total was largely increased by
President Balmaceda in 1891. On the 31st of July 1898 the conversion
of paper notes, under the law of 1st June 1895, was suspended, and the
government issued 27,989,929 pesos to the banks of issue, which was
described as a loan at 2%, and raised their outstanding circulation to
40,723,089 pesos, and at the same time issued on its own account
17,693,890 pesos and assumed responsibility for 1,193,641 pesos which
had been illegally put into circulation before 1896. This gave an
aggregate registered circulation of 86,045,166 pesos in 1898. In 1904
another issue of 30,000,000 pesos was authorized and the date of
conversion was still further postponed, and in 1907 a more general act
provided that the maximum paper circulation should not exceed
150,000,000 pesos of the value of 18d. per peso, and that new issues
should be made only through the issue department and against deposits
of gold, which deposits would be returned to depositors on the
presentation of the currency issued. The redemption of this issue was
guaranteed by a conversion fund of 100,000,000 pesos, and by an
authorization to issue a loan of 50,000,000 pesos to redeem the
balance, if necessary. The conversion fund under the ac